Dataspeaks

“I opened the other three accounts because registration is easy and more brokerages mean I get to receive more regular investment advice,” the 30-year-old office worker explained.

In the last two years brokerages have hugely simplified the account opening process, he said.

When he opened his first account in 2020, he had to visit the brokerage, but this year he opened a new account online.

People like Dung are partially the reason why the number of new stock accounts has been skyrocketing despite a decline in trading.

Over 476,000 new accounts were registered in May, the highest ever monthly figure in the stock market’s two-decade history, according to the Vietnam Securities Depository.

Around 1.4 million new accounts were opened in the first five months of this year, higher than the total number added between 2017 and 2020.

There are now 5.65 million stock accounts, or one each for 5.7 percent of the population.

But the average daily trading in May fell by 32 percent year-on-year to VND17.77 trillion ($764.14 million), the lowest in 15 months.

Analysts said the number of stock account is rising because brokerages are making it easier than ever to open a new account as they compete for market share.

Le Ngoc Nam, director of analysis and consultancy at Tan Viet Securities, said since many brokerages are now partnering with banks, a new bank customer usually gets a new stock account too.

It takes just minutes to open an account, and investors can sign digitally on smartphone apps to have their contracts approved.

“Many accounts are not even activated, and there is no money in them to trade,” Nam said.

Nguyen The Minh, director of analysis at Yuanta Securities Vietnam, said “ghost accounts” make up around 80 percent at his company.

Park Won Sang, CEO of brokerage KIS Vietnam, said while within five months this year the number of new stock accounts exceeded last year’s figure, only 10-12 percent of them see transactions.

The main bourse, the Ho Chi Minh Stock Exchange, saw trading plunge to the lowest levels in a year and a half to around VND10 trillion.

The benchmark VN-Index has been struggling to recover from a steep fall in May. An 18.7 percent fall in the benchmark this year has investors running for cover.

Minh said: “The new account figures do not reflect actual investment. This creates a distorted picture of the market.”

It also makes it more difficult for authorities to manage the market, he added.

Park said there is a shortage of stock brokers with an estimated 5,000 taking care of 5.6 million accounts, meaning one broker for every 1,000-odd clients.

It had contracted last year.

The economy has “recovered quickly, uniformly and quite comprehensively,” city Party secretary Nguyen Van Nen said.

People’s Council chairwoman Nguyen Thi Le said the recovery was “faster than expected.”

The index of industrial production has been rising since February, and is up 3.1 percent for the first six months.

Eight out of nine service sectors grew with real estate bucking the trend, shrinking by 5.82 percent.

The fastest growth was seen in finance and banking, information and communication and logistics.

Some other key indicators also rose, including import-export (by 13.8 percent), tourism revenues (29.9 percent) and foreign direct investment (60 percent).

But rising costs, driven by the Russia-Ukraine crisis and higher fuel prices, has affected consumption and recovery.

Public spending occurred at the slowest pace ever, with only 17 percent of the targeted amount spent in the first half of the year.

During the rest of this year the city will focus on promoting public spending, mitigating difficulties faced by companies, improving the business environment, and enhancing tourism activities.

Each district should develop a specific tourism product, deputy chairwoman of the People’s Committee, Phan Thi Thang, instructed.

The city will also roll out price stabilization programs and closely monitor fuel and gold prices to reduce inflation risks.

When asked about air conditioners, salespeople at a store in HCMC’s Thu Duc city mainly show buyers foreign products like Daikin and Panasonic, or the more budget-friendly Casper and Gree.

When customers ask about local brands, the staff only recommend a few models but with a warning to consider carefully as these products “are not much cheaper than foreign brands.”

On its website, Vietnam’s largest electronics retailer Dien May Xanh offers over 200 different air-conditioners, only 15 of them made by Vietnamese companies Nagakawa, Kangaroo and Funiki.

In the case of TVs, washing machines and refrigerators, Vietnamese brands have almost disappeared from shelves.

At other retailers such as Nguyen Kim and Cho Lon, only a few Vietnamese brands, accounting for less than 5 percent of all products, are displayed.

This has been a trend for years. The country has around 10 local electronics brands, but most are barely known to consumers.

Nagakawa, one of the leading firms, posted sales of less than VND500 billion between 2008 and 2017. Its revenues rose to VND1.02 trillion in 2019 thanks to an expansion in the product portfolio, but profits have only been around the VND10-billion mark, with the net profit margin falling from 3 percent in 2015-2017 to around 1 percent in 2018.

Funiki, owned by steel giant Hoa Phat, recorded annual sales of under VND1 trillion between 2016 and 2020.

Meanwhile, popular Japanese brand Daikin posted revenues of around VND12 trillion.

Daikin and Panasonic each have around 25 percent of the air conditioner market, followed by LG and Samsung of South Korea and Sweden’s Electrolux.

Challenges

Nagakawa’s management has attributed slow growth to “fierce competition” in the market, which has over 100 brands.

The company has to reduce prices to remain competitive with cheap products from China while increasing spending on marketing to gain market share.

Other weaknesses of Vietnamese brands include distribution and sales policies.

Nagakawa only set up a nationwide sales network in 2020, according to its annual report.

Funiki’s products only appeared in supermarkets last year. It currently has 2,000 outlets, much lower than that of foreign brands.

Foreign brands, meanwhile, offer around 5-10 percent commission to sellers to incentivize them, a rate local brands cannot afford, making them lose out in cities and retreat to rural areas.

Potential

But there are opportunities for Vietnamese brands to grow, especially in air conditioning.

Only 31 percent of Vietnamese households have air conditioners, much lower than the ownership rate of TVs (92 percent), refrigerators (80 percent) and washing machines (50 percent).

The home appliances market in Vietnam was estimated to be worth VND62 trillion last year, with air conditioners accounting for VND16.75 trillion, according to data from leading market research company GfK.

Demand is expected to surge thanks to rising temperatures, economic growth and improving affluence.

By 2050 Vietnam’s average temperature will be 0.26-2 Celsius degree higher than in 1986-2005, GEMMES Vietnam forecast in a recent report.

The country’s GDP growth was over 6 percent between 2014 and 2019.

Back on track

Nagakawa is planning to consolidate its position in the north , expand to the south and develop new sales channels.

Considering marketing most sustainable path to success, the company aims to build branding strategies for its portfolio.

Hoa Phat, the parent company of Funiki, is focusing on raising output. It is building plants in the northern province of Ha Nam and southern province of Ba Ria – Vung Tau, both of which will start operating soon.

The steel giant also plans to carry out research so that its appliances meet international standards and to export.

Expanding distribution channels, enhancing promotions and warranty are key to winning in the domestic market.

Local brands should focus on building their brand image through marketing and advertising, the manager of an electronics store in the southern province of Long An told VnExpress .

“When customers buy a product, they hardly inspect the specifications carefully. The first thing that comes up in their mind is whether the brand name sounds familiar or not.”